8/20/2002 @ 2:50PM

EarthLink Blocks Pop-Up Ads To Fuel Growth

In offering its subscribers the free option to block pop-up ads,
EarthLink
may have stumbled onto something that could reignite its flagging dial-up subscriber growth.

Yesterday, EarthLink
said it was making available a free download called “pop-up blocker” that effectively blocks the generation of pop-up windows. The software, acquired from
Failsafe
, will be integrated into new releases of EarthLink’s products in the future.

Rob
Raier
Rob Raier
, vice president of narrowband marketing for the Atlanta-based company, says EarthLink polled subscribers and confirmed what they already assumed was true. “Pop-up ads are a big hassle; they’re irritating and incessant.” He says their surveys found that pop-ups rank alongside bad connections, spam and bad customer service as the top irritations of Web usage.

EarthLink
EarthLink Hunts Customers
For EarthLink, publicly acknowledging the annoyance of pop-up advertising is almost of no consequence to its business. That’s because only about 1% of its revenue comes from advertising. By comparison,
United Online
, formed from the merger of
NetZero
and
Juno Online Services
, derived a little more than 15% of its revenue, or $26 million, last fiscal year (ended in June) from advertising.

Simply put, because they are more reliant on advertising, other ISPs cannot afford to offer a free product that blocks their advertisers’ message, nor is it likely they will openly acknowledge the undeniable annoyance factor.

Still, EarthLink and United Online appear to be strengthening. In early August, United reported strong fourth-quarter results and raised its estimates for the year. Shares of the firm, which offers a mix of free and paid Internet services, have more than tripled since the start of the year, to $13.

Despite disappointing revenue growth as a result of a decline in dial-up subscribers, EarthLink narrowed its second-quarter loss to $40 million from $98 million in the year-ago quarter. Shares of the $1.2 billion (2001 sales) company have been halved in 2002, to about $6.50.

Both companies may benefit from the myriad troubles at
AOL Time Warner
‘s
America Online
division, which is struggling with executive changes, lack of a coherent growth strategy and questions about its accounting. If that wasn’t bad enough, AOL yesterday received a black eye when the University of Michigan released an annual study finding that AOL scored the lowest in the category of Web portals for customer satisfaction.

Today, J.D. Power and Associates said that EarthLink ranked at the top or near the top for dial-up and high-speed Internet access, while AOL ranked comparatively low. J.D. Power looked at billing, customer service, cost, reliability and performance, image and e-mail.

All the ISPs are struggling to migrate subscribers to high-speed access, which will likely put a crimp on growth in the short term. In trying to lure new customers, EarthLink has taken a unique approach with the pop-up blocker, one that just may be enough to get users to switch.